After months of anticipation and speculation, we finally know what the Trump administration’s first stab at tax reform looks like.
The president has released the broad strokes of his tax proposals in a single-page outline that included these highlights:
- For individuals: The seven current tax brackets — at 10, 15, 25, 28, 33, 35, and 39.6 percent — would be replaced with three brackets at 10, 25, and 35 percent, though the income levels at which those rates would apply were not announced. In addition, the standard deduction would be doubled and the alternative minimum and estate taxes would be repealed. “Trump also reiterated his call for repeal of the net investment income tax of 3.8 percent imposed on unearned income and gains of high-income taxpayers by the 2010 Patient Protection and Affordable Care Act,” Paul Bonner wrote for the Journal of Accountancy.
- For businesses: The corporate tax rate would fall from 35 percent to 15 percent and a number of undefined “tax breaks for special interests” would be eliminated. In addition, “the proposal calls for a territorial system of taxation, which generally would exclude from taxation foreign earned income,” Bonner reported. “It also would impose a ‘one-time tax’ on corporate earnings realized and held overseas and on which tax is deferred, possibly the same as, or consistent with, a deemed repatriation tax that Trump has previously proposed at a 10 percent rate.”
We’re a long way from knowing how many of these proposals will survive under the congressional knife. For now, this is what we have.
We also have the usual suspects examining the proposals and offering analyses and educated guesses about what the proposals would mean for individual and corporate taxpayers. We’ve collected a few of them here.
- CCH Tax Briefing: White House calls for big individual and business tax cuts
- Trump tax plan: Much work still to be done (from Accounting Today)
- 5 things financial executives should know about the looming tax reform battle (from Financial Executives International)
- Likely winners and losers under the Trump tax plan (from Forbes)
- Trump’s 15 percent corporate tax seen as ‘gambit’ as he unveils plan (from Bloomberg)
- Popular deduction in Maryland would be ended by Trump tax plan (from The Baltimore Sun)
- Businesses like Trump tax plan, but won’t rush to hire (from the Associated Press)
- Americans may soon have to kiss these lucrative personal tax deductions goodbye (from MarketWatch)
- What Trump’s tax plan means for your retirement (from MarketWatch)
Read up, then settle in for what promises to be a long and bumpy negotiation.